Legislators in Berlin have just passed “The Law on the Prohibition of Misuse of Housing.” This law will have a major effect on short-term rentals in Berlin. This new legislation is intended to help make more affordable housing available to locals.[1] This law is estimated to bring 8-12,000 apartments “back onto the market.”[2]

Under this new law, individuals who rent out their apartment for less than thirty days will be required to obtain a license to do so. There are many “public interest exceptions” that will exempt individuals under this law, such as: individuals who are in Berlin for a medical procedure, interns, and embassy staff.

This law won’t be enforced for two years, so there is plenty of time for short-term renters to adjust to the new requirements.

Homeaway has also had its client information subpoenaed by the NY AG, Eric Schneiderman. See the video below for Homeaway Co-Founder Carl Shepherd’s explanation of how his company is dealing with this.

We will continue to update you as new developments occur.What do you think this means for other peer to peer vacation rental sites?
Do you think there will be more subpoenas coming their way?

On October 7th, New York State Attorney General (AG) Eric Schneiderman issued a subpoena to Airbnb demanding that they supply the AG with the user data of all of the NY residents who have rented their apartments through Airbnb for the last three years. This subpoena is part of the AG’s larger investigation into the illegal rentals taking place on Airbnb’s site.[i] The AG’s interest in enforcing the Short Term Rental Ban raises a lot of concern for those who rent through Airbnb.

The AG specifically requested: (a) name, physical and email addresses, and any other contact information; (b) their Profiles; (c) address of the Accommodation(s) rented, including unit or apartment number; (d) the dates, duration of guest stay, and the rates charged for the rental of each associated Accommodation(s); (e) method of payment to Host including account information; and (f) total gross revenue per Host generated per year for the rental of the Accommodation(s) through [Airbnb’s] Website; (g) all tax related documents.[ii]

According to the AG, “the 10 most active Airbnb hosts owe $8.5 million in hotel taxes for nights they’ve rented their homes and skirted the 15 percent tax that hoteliers in the state are forced to pay.”[iii]

Airbnb has responded by going to the NY State Supreme Court (which is the trial court in NY) to reject the subpoena as overly broad.[iv] Time will tell whether the judge will enforce or deny the AG’s subpoena.

Both Attorney General Schneiderman and Senator Krueger have stated that the law was intended to curtail the actions of large illegal hotel operations rather than individuals who just rent out their apartments once in a while and don’t disturb anyone.

Senator Krueger stated that “Airbnb should be obligated to follow the law, and they should open their listings for inspection.”[v]

Technology start-ups like Airbnb move at a much faster pace than the law. A recent article in The New Yorker had some suggestions on finding a middle ground in the “delicate ecosystem” that is New York City. They suggested an “in-between solution” where there would be a deal on taxes, a crackdown on illegal hotels, and landlord permission required.[vi]

We will be keeping you updated as this story develops. We will also be posting articles in the near future that will guide you through making sure that your apartment rental is legal.

In our May 28, 2013 article, we explained the initial ruling in the Nigel Warren case. The initial verdict came as a shock to many, especially those familiar with Chapter 225 of 2010, the short-term rental ban law. The Environmental Control Board (ECB) verdict seemed to contradict not just what the law stated, but also the legal intent, as stated by Senator Krueger who sponsored Chapter 225 of 2010 (see our June 14, 2013 article). Immediately following the verdict, Airbnb announced that they would help Nigel through the appeals process.

In what Airbnb is calling a “huge victory” [1] and what Senator Kruger is calling a mere “PR Victory” that doesn’t really change anything in the vacation rental world [2], a September 26th ruling by the New York City ECB Appeal Board overturned the initial Nigel Warren decision.

While it is true that the ECB found that Nigel Warren did not violate Chapter 225 of 2010 [3], its ruling does not apply to the majority of the vacation rental business. As Senator Kruger states in a statement released in response to the ECB ruling, “Airbnb may have scored a PR victory with the success of this appeal, but that’s all it is. The vast majority of Airbnb’s business in New York City — short-term rentals of apartments in residential buildings without any permanent residents present — remains unambiguously illegal.”

In the verdict, the ECB states that the ALJ had created a new test that was “wholly without support in statute, case law, or legislative history.” Additionally, the ECB held: (1) that there is nothing in law that requires that there be a personal relationship between the permanent resident and the “boarder,” “roomer,” or “lodger” (something the lower court’s ruling required); (2) that having a paying boarder staying for a few days in your apartment while one of the permanent occupants of the apartment is also there is not a violation of the law; (3) that the statutory definition of “permanent residence purpose expressly allows a paying, lawful boarder, roomer or lodger, to live a few days within the household of the permanent occupant.”

Despite Airbnb’s efforts to spin it otherwise, the ECB ruling does not state that one may leave and rent out their apartment to a stranger or anyone else for less than 30 days . Indeed, as Senator Krueger forcefully reminds us: in NYC most short term rentals where a permanent tenant is not home are still illegal.

Under this law, it is legal to rent out your accommodation for a short period of time as long as it is and remains your main residence. If however, the accommodation does not qualify as your main residence, you are required to obtain a license to rent out your property on a short-term basis[2]. If you fail to obtain this license, you may face steep fines of up to 50,000 Euros[3].

New York State Senator, Liz Krueger, has issued a statement in response to the recent Nigel Warren decision. Senator Krueger co-sponsored Chapter 225 of 2010 (also known as the illegal hotels legislation), the law at issue in the Nigel Warren case. She begins her statement declaring that Chapter 225 of 2010 was not intended to target individuals such as Nigel Warren but “large, ongoing hotel operations.”

The real problem”, Senator Krueger says, “is the devil-may-care attitude companies like Airbnb have taken toward the legal consequences for their users. Whether it’s laws like New York’s, or it’s the basic terms of use of a potential user’s apartment, companies like Airbnb or Flipkey are recruiting private citizens into their business model without sufficiently warning them that it may not be legal and could even lose them their homes. That’s pathologically irresponsible.”

Senator Krueger ends her statement announcing that she is “open to discussing good faith efforts to improve the law.” Unfortunately, she adds: “the only proposals that have been put forward so far would gut the law, making it practically unenforceable and leaving New Yorkers without any recourse against illegal hotel operations compromising the safety and security of their homes”.

Creating a Registration System for Vacation Rentals in New York City

A bill was recently introduced in the New York Senate to narrow the scope of Chapter 225 of 2010 (referred to by the media as the illegal hotels legislation) [1].

Senator Parker, a Democrat from Brooklyn, sponsored this new bill (S5443-2013) [2].

It is a slightly modified version of the now defunct Golden Bill [3]. Similarly to the Golden Bill, under this proposed legislation, owners and leaseholders of a residential unit are allowed to rent for less than 30 days provided that:

(1) The unit is not a SRO (Single Room Occupancy),
(2) The unit is not rent regulated,
(3) The unit has at least one bathroom and one kitchen,
(4) The unit has smoke detectors in each room ,
(5) The unit carries sufficient fire, hazard and liability insurance and
(6) The unit is registered as a short-term rental with the Department of Buildings.

The major differences between the Parker Bill and the Golden Bill appear to be the following:

(1) The Parker Bill exempts owner-occupied brownstones of 4 units or less from the requirements listed in the legislation,
(2) The Golden Bill had limits on how many units could be rented for less than 30 days in a building. The Parker does not impose any such limits.
(3) The Golden Bill required that the license registration number be posted on the website operated by the owner or leaseholder to promote the short-term rental. The Parker Bill does not have such a requirement.

What do you think of the Parker Bill? Will it gather enough votes to pass?